The high Australian dollar has weighed on company profits and the recovery from the global financial crisis has been slower than first thought.

However, Mr Eslake says the Government should have tried to under-promise and over-deliver, after considering the forecasts.

"I think that's a wise maxim ... in a wide range of circumstances," he said.

The carbon and mining taxes are also partly to blame for the budget black hole.

Combined they took a $13 billion hit between May 2012 and May 2013, due to falling commodity prices and a collapse in the European carbon price.

On the other side of the equation, there has been more spending and a few cost blow-outs.

The record rate of asylum seeker boat arrivals led to a $3.2 billion blowout in the immigration budget.

Prime Minister Kevin Rudd's Papua New Guinea solution, which will see the detention centre on Manus Island expanded, is likely to stretch the immigration portfolio even further.

Other significant blowouts include an extra $2.2 billion over four years in private health insurance payments and $2.1 billion in payments through the Medicare Benefits Schedule.

The Government has also committed to new multi-billion dollar programs, such as education funding reform ($15 billion over six years) and a disability insurance scheme ($14.3 billion over seven years).

Cuts are expected to be made to make up the revenue shortfall but they are now harder to find.

Especially on the eve of an election and after $3.9 billion was found to pay for the end of the carbon tax last month.

Fringe Benefits Tax on cars will be tightened, saving $1.8 billion, and several climate change programs will be cut or scrapped.

However, the politics of this economic update are crystal clear.

Deflect attacks about debt and neutralise the bad news in the next budget update, which is due 10 days into the coming election campaign.